Buy to Let Equity Release Explained in Simple Terms

Buy to Let Equity Release Explained in Simple Terms

Buy to let equity release is an excellent way for property owners to access the capital they have built up while mortgage payments. Getting this capital in the form of a tax-free loan can help them build more assets.

This article will explain the complicated topic of BTL equity release in the simplest way.

Before we begin, we have to clarify two types of buy-to-let equity matters. Releasing equity from a buy-to-let is totally different from an equity-release mortgage on a buy-to-let.


Equity release on a buy-to-let is the process whereby a retired individual over 55 can gain access to the capital they have built up on their property over the years. Depending on the clients ‘ requirements, this can be either a lump sum or a monthly payment. While mortgage brokers are generally CeMAP qualified, The equity release market has its own specialists dealing with these products.


As I mentioned before, releasing equity from a buy let mortgage is a totally different process from the above. Equity release from a buy let mortgage is a traditional way of releasing equity from a buy to let property, regardless of age and retirement. 

In this article, we will aim to cover releasing equity from a buy to let. However, we must not get confused with equity release buy to let mortgage. If you do need assistance in equity release buy to let mortgage for over 55s, please call us, and we will refer you to one of our affiliate companies.

What does it mean when you release equity on a buy to let?

If you own a buy to let and have built-up equity in the property, you can access the equity and use the money for various things. Some of the common uses are additional property purchases or home improvements.


How do you release equity on a buy to let mortgage?

There are three main ways to release equity on a buy to let mortgage.

  1. Remortgaging your existing buy to let is the most common way an individual will access the additional equity in his or her property. An example would be if a client owns a property worth 200,000 and has an existing mortgage of 100,000, they can remortgage to a buy to let product off 75% LTV which will give them access to 50,000 excess cash.

  2. You don’t always have to remortgage your buy to let property; instead, you could approach your existing lender for a further advance. This is where your existing lender will give you an additional lump sum and add it to your current mortgage.

  3. You can always get a secured loan or a second charge against your buy to let property in order to access further equity. Generally speaking, this process tends to be more expensive; however, lots of people use it depending on different circumstances.

Can you release equity on a buy-to-let property?

The general rule in this current market is that you will be able to borrow 75% of the market value of the buy-to property. Some factors could prevent this, like the rental stress test. However, most of our clients can borrow up to 75% off a property’s market value.

Releasing Equity On a Buy to Let: Eligibility Criteria

When releasing equity on a buy to let mortgage, we must meet several eligibility criteria.

  1. Good credit can help clients release the maximum amount at competitive rates.

  2. Existing income is also very beneficial; however, many lenders offer this type of product with no minimum income.

  3. The property itself must be structurally sound and suitable for lending purposes.

  4. One of the biggest factors in releasing equity for buy to let’s is the rental potential of the subject property. The rental income must meet the stress test, and the lenders often need sight of the assured shorthold tenancy.

Please call one of our expert mortgage brokers for further discussion around eligibility criteria for releasing equity on buy to let properties.


How much equity can you release from a buy to let?

It is possible to release up to 75% of the market value from existing buy to let properties. The exact amount you can release from a buy to let property depends on a few factors. 

  1. The current worth of the property. 

  2. Owners age. 

  3. Amount of equity you have built up. 

It’s a no-brainer that you can release more from a high valued property. But most providers consider age when calculating. Older homeowners can release more equity from a buy to let property. 

Pros and cons of releasing equity on Buy to Let?

The most apparent pro of releasing equity through buy-to-let is the access to additional funds. This generally frees up an individual to spend money on various options.

The drawback to raising additional funds is that your monthly payment will naturally increase. The client will have to make plans as to how they will repay the additional funds borrowed. Please call one of our expert mortgage brokers for details around what are the best options to pay the mortgage off at the end of the term.


What are the Alternatives of Buy to Let Equity Release? 

As discussed earlier, secured loans and second charges are other options; however, in our opinion and experience, we advise clients to remortgage to achieve the most competitive rates.

How Can Expert Mortgage Advisors Help? 

We have helped hundreds of clients release equity from buy-to-let properties. Whether it’s £50,000 or £500,000, We have experience in all levels of releasing equity from buy to let mortgages. Please call one of our experts to discuss your requirements further.

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